FEMA Overview of Homeowner Flood Insurance Affordability Act
|Targeted News Service|
This law repeals and modifies certain provisions of the Biggert-Waters Flood Insurance Reform Act, which was enacted in 2012, and makes additional program changes to other aspects of the program not covered by that Act. Many provisions of the Biggert-Waters Flood Insurance Reform Act remain and are still being implemented. While
The new law lowers the recent rate increases on some policies, prevents some future rate increases, and implements a surcharge on all policyholders. The Act also repeals certain rate increases that have already gone into effect and provides for refunds to those policyholders. The Act also authorizes additional resources for the
More information on the new law and its impacts on the NFIP will be forthcoming.
For certain flood insurance policies affected by the Pre-Flood Insurance Rate Map(Pre-FIRM) subsidy elimination required by BW-12, the new law mandates refunds of the excess premiums that those policyholders were charged pursuant to the requirements of BW-12. Refunds will not affect all subsidized policyholders who received rate increases as directed by
o Prior to restoring and refunding premiums,
o In accordance with the new law,
o The law provides WYO insurance companies between six and eight months to implement the changes and update systems to implement the guidance.
* REFUNDS APPLY TO:
o Policyholders in high-risk areas who were required to pay their full-risk rate after purchasing a new flood insurance policy on or after
* REFUNDS MAY APPLY TO:
o Policyholders who renewed their policy after the Homeowner Flood Insurance Affordability
Act was enacted on
* REFUNDS DO NOT APPLY TO:
o Policyholders paying the 25 percent annual rate increases, as required by
12, for a Pre-FIRM subsidized non-primary residence, business, Severe Repetitive Loss property, or building that was substantially damaged or improved.
o Policyholders whose full-risk premium is less than the Pre-FIRM subsidized premium, or who were not overcharged according to any retroactive revisions to the Pre-FIRM subsidized rates required by the new law.
* Policyholders who saw usual, annual rate increases in 2013 or 2014, or policyholders who paid the 5 percent fee, as required by BW-12, for the
PREMIUM RATES FOR SUBSIDIZED POLICIES
* The new law requires gradual rate increases to properties now receiving artificially low (or subsidized) rates instead of immediate increases to full-risk rates required in certain cases under BW-12.
* With limited exceptions flood insurance premiums cannot increase more than 18 percent annually.
o There are some exceptions to these general rules and limitations, The most important of these exceptions is that policies for the following properties will continue to see up to a 25 percent annual increases as required by BW-12 until they reach their full-risk rate: Older business properties insured with subsidized rates;
o Older non-primary residences insured with subsidized rates;
o and buildings that have been substantially damaged or improved built before the local adoption of a Flood Insurance Rate Map (known as Pre-FIRM properties).
* In order to enable new purchasers of property to retain Pre-FIRM rates while
NEW SURCHARGE ON ALL POLICIES
* A new surcharge will be added to all policies to offset the subsidized policies and achieve the financial sustainability goals of BW-12. A policy for a primary residence will include a
* The new law repeals a provision of BW-12 that required
* Also for newly mapped in properties, the new law sets first year premiums at the same rate offered to properties located outside the Special Flood Hazard Area (preferred risk policy rates).
* With limited exceptions, flood insurance premiums cannot increase more than 18 percent annually.
FLOOD INSURANCE ADVOCATE
* The new law requires
* The Advocate will:
o Educate property owners and policyholders on individual flood risks; flood mitigation; measures to reduce flood insurance rates through effective mitigation; the flood insurance rate map review and amendment process; and any changes in the flood insurance program as a result of any newly enacted laws;
o Assist policy holders and property owners to understand the procedural requirements related to appealing preliminary flood insurance rate maps and implementing measures to mitigate evolving flood risks;
o Assist in the development of regional capacity to respond to individual constituent concerns about flood insurance rate map amendments and revisions;
o Coordinate outreach and education with local officials and community leaders in areas impacted by proposed flood insurance rate map amendments and revisions; and
o Aid potential policy holders in obtaining and verifying accurate and reliable flood insurance rate information when purchasing or renewing a flood insurance policy.
* The new law permits
* The law requires that residential basement floodproofing be considered when developing full-risk rates after a map changes increasing the Base Flood Elevation in an area where residential basement floodproofing is permitted.
* The law mandates that
* The law increases maximum deductibles.
* The law encourages
DRAFT AFFORDABILITY FRAMEWORK
* The new law requires
* In developing the affordability framework,
o accurate communication to customers of the flood risk,
o targeted assistance based on financial ability to pay,
o individual and community actions to mitigate flood risk or lower cost of flood insurance,
o the impact of increases in premium rates on participation in NFIP,
o and the impact of mapping update on affordability of flood insurance.
* The affordability framework will include proposals and proposed regulations for ensuring flood insurance affordability among low-income populations.
* The Homeowner Flood Insurance Affordability Act requires the
2014 flood insurance reform laws. The law requires the Administrator to certify in writing to
* As the new national flood mapping program is being established,
* The law lifts the
* The law exempts mapping fees for flood map changes due to habitat restoration projects, dam removal, culvert re-design or installation, or the installation of fish passages.
* The law requires
* The law requires
* Homeowner Flood Insurance Affordability Act Overview.pdf (http://meeks.house.gov/sites/meeks.house.gov/files/Homeowner%20Flood%20Insurance%20Affordability%20Act%20Overview.pdf)
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